Retirement Basics and Long-Term Financial Planning
Plan for the Years Ahead
Welcome back
How today works
From Session 4
Read before you sign. Ask for it in writing. Today’s form to read: the retirement plan enrollment form at work.
Your situation is yours
We teach how the system works. What applies to you depends on your work history and status — ssa.gov and a free counselor can tell you. Nothing is recorded.
The series · five sessions
One path, five steps
- 1Emergency Savings & BudgetingBuild a safety net
- 2Saving & Investing for the FutureGrow assets
- 3Fraud & ScamsProtect money
- 4Consumer Rights in the U.S.Understand rights
- You are here5Retirement BasicsPlan for retirement
In every session we practice three questions
Opening question · private, not recorded
Picture yourself at 70. Who pays for your life?
Every answer is common.
In the U.S., most people need three sources together. Today: what they are, and what you can start now — at any age.
Good — and today shows the accounts that make savings grow faster, sometimes with employer money added.
Common in many cultures, and real. The trade-off: your children may also be supporting their own children. A second source helps everyone.
A pension from home may not follow you — and the U.S. one depends on your work here. Worth checking, not assuming.
Most people arrive here thinking about this year, not year 30. Today is the first look.
Honest. By the end of today you will know the three sources and your first action.
Think about your own answer. You do not need to say it out loud.
Today’s goals
By the end of today, you can…
Name the three sources of retirement money in the U.S.
Explain an employer plan, a match, and vesting
Know what an IRA is — an account you open yourself
See why starting now beats starting later
Put the pieces in order: beneficiaries, insurance, documents
Retirement is not an age. It is the day your work income stops. Planning means making sure other money is ready for that day.
Part 1 · Why now
Why plan now — even if you arrived at 45
The years are long
Many people live 20 to 30 years after they stop working. That is as long as a whole career.
Home may not follow you
A pension or family system from your home country may not reach you here. Check what does — do not assume.
Time is the biggest ingredient
From Session 2: $150 a month for 20 years ≈ $78,000; for 30 years ≈ $183,000 (illustration at 7%). The next 20 years count — whenever they start.
The best time to start was ten years ago. The second best time is this month.
Part 1 · The shape of the system
Three sources of retirement money
1 · Social Security
A government benefit you earn by working and paying into it from each paycheck. The amount depends on your earnings and when you start it.
Whether and how it applies to you depends on your work history and status → ssa.gov
2 · A plan at work
Often called a 401(k) or 403(b). Money from your paycheck goes in before you see it. Some employers add money (a match). It grows for years.
Not every job has one — ask HR.
3 · Your own accounts
An IRA — a retirement account you open yourself. Plus savings, a home, a small business. Anything you build that will still be there when work stops.
Available whether or not your job has a plan.
Most people need all three. Social Security alone replaces only part of a working income for most families.
Part 1 · Source 1
Social Security: what to know
How it works — in general
- You earn credits by working and paying Social Security tax. Retirement benefits need about 10 years of work for most people.
- The monthly amount depends on your earnings over your working years.
- You can start between 62 and 70. Starting later means a larger monthly amount for life.
- Medicare (health coverage from 65) is a separate program — ask about it at 64.
Questions only ssa.gov can answer for you
- “Do my years of work count? How many credits do I have?”
- “I worked in another country — do those years count here?”
- “What applies to my status and my family?”
- Create a free account at ssa.gov/myaccount to see your own record — and check that your earnings are listed correctly.
Social Security never calls to threaten you or ask for gift cards (Session 3). Real contact comes by mail or through your own account.
Part 1 · Source 2
The plan at work: five words to know
Contribution
The percent of your pay that goes in automatically. You choose it. You can change it.
Match
Money your employer adds when you contribute — up to a limit. Part of your pay. Use it.
Vesting
When the employer’s money becomes fully yours — often after some years. Ask: “What is the vesting schedule?”
Pre-tax or Roth
Pay tax later (pre-tax) or now (Roth). Both are fine. Ask which your plan offers.
What is inside
The box is not the investment (Session 2). Choose a fund of many companies — or a fund that adjusts itself as your date gets close.
The enrollment form asks for exactly these: a percent, pre-tax or Roth, and what goes inside. Now you can read it.
Part 1 · Try it
The match, in numbers
Part 1 · Source 3
No plan at work? An account you open yourself
An IRA
- A retirement account you open — at a bank, credit union or investment company.
- Two kinds: traditional (tax later) and Roth (tax now). Both grow without yearly tax.
- You need earned income. A yearly limit applies — it changes; see irs.gov.
- Taking money out early usually costs tax and a penalty.
Who this is for
- People whose job has no plan.
- People who work for themselves — cleaning, driving, a small shop. Business owners have extra plan types; ask a tax professional.
- People who already take the full match and want to save more.
- Which kind fits — and whether you can open one — depends on your tax situation: ask a free counselor or a tax professional.
Session 2’s rule: the IRA is the box. Choose what goes inside — many companies, low fees, left alone for years.
Part 2 · Try it
Start now, or start in ten years?
Activity · everyone decides together
What comes first?
A $500–$1,000 emergency fund
Enough in the plan to get the full match
A credit card balance at 24%
More retirement savings beyond the match
Saving for the children’s college
Monthly money to family abroad
Part 3 · Life happens
Changing jobs: do not cash out
Cashing out
Tax, usually a penalty, and all the future growth gone. A $10,000 cash-out at 30 could have been about $76,000 at 60 (illustration, 7%).
Keep it growing
Leave it where it is, move it to the new job’s plan, or move it into an IRA — a rollover. Ask the new HR or a counselor how. No tax when done correctly.
Keep a list
Every job, every plan, the company that holds it, a phone number. Accounts get forgotten. Your own contributions are always yours; the employer’s part depends on vesting.
Money for later stays money for later — even when the job changes.
Part 3 · Beyond the account
Four pieces of a long-term plan
Beneficiaries
The person who receives an account if you die. Name one on every account and policy. Update after a marriage, a birth, a divorce.
Insurance
Health, always. Life insurance if others depend on your income — the simple kind covers a set number of years. Renters insurance is cheap.
Documents in one place
Accounts, policies, immigration papers, the list of plans, a simple will. Legal aid can help with a will. One folder; one person who knows where it is.
Talk to your family
Who knows where the money is? Who would you call? A ten-minute conversation now saves months later.
Naming a beneficiary takes five minutes and costs nothing. It is the most common thing people forget.
Part 3 · A target, not a rule
How much should go toward retirement?
- 1%StartAny percent beats zero. Most people do not feel 1%.
- The matchCollect all of itOften 3–6%. It is part of your pay.
- +1% a yearWith each raiseAsk if the plan can raise it automatically.
- 10–15%Over time, including the matchA common long-term target. Takes years to reach — that is normal.
These are common guidelines, not rules. Someone starting at 50 may aim higher; someone paying down 24% debt may pause at the match. The one thing that is always true: starting beats waiting.
Case study · a fictional family
Meet Amara and Daniel
Amara, 36, and Daniel, 38, have been in the U.S. for five years with two children. Daniel drives for a hospital transport service: $36,000 a year; his job offers a plan that matches 50% of what he puts in, up to 6% of pay. He put in 0% — “I did not understand the form.” Amara runs a small cleaning business — no plan at work. They send $150 a month to Amara’s parents.
Their questions
- “What should we do first with $200 a month of room?”
- “What about Amara — she has no plan at work.”
- “If Daniel changes jobs, what happens to the money?”
6% of Daniel’s pay = $180 a month before tax (about $150 from take-home) → the hospital adds $90 a month.
Case study · the decision
$200 a month of room. A 50% match. A card at 24%. What first?
The common order
$150 from take-home brings $90 from the hospital — a 50% gain on day one, more than the card’s 24%. The other $50 plus the tax refund go to the card. Then Amara’s IRA.
Reasonable — with one cost
24% is expensive and the card is gone in about 14 months. But every month without the match leaves $90 of hospital money unused. Many would take the match and split the rest.
Right idea, third in line
Amara needs her own box — but nobody adds 50% to it. The match and the 24% card come first. Then the IRA.
Loving — and the wrong order
There are loans and scholarships for college. There are none for retirement. Parents who are secure are the best gift to children.
Three questions: Decision — where $200 goes first. Trade-offs — 50% now vs. 24% saved vs. Amara’s box. Next action — Daniel fills in the enrollment form at 6% this week; both name each other as beneficiary.
Take-home action · 5 minutes
Before you leave today
Ask HR three questions
“Is there a plan? Is there a match? What is the vesting schedule?” Then enroll — at least to the match, or 1%.
Name a beneficiary
On every account and policy you have. Five minutes each.
Check your own record
ssa.gov/myaccount if you have a Social Security number — or ask a free counselor what applies to you.
Questions · and the end of the series
You built a path
A safety net
Income ≠ money available. First goal: $500.
Money that grows
Save for soon, invest for later. Many baskets, low fees, long time.
Against scams
Four red flags. Stop · Check · Talk.
With your rights
Ask for it in writing. Free help exists.
For the years ahead
Three sources. The match. Start this month.
Free help, any time
House of Friendship staff · a non-profit credit counselor · legal aid · ssa.gov · consumerfinance.gov · ReportFraud.ftc.gov
Three questions, for every decision
What is the decision? What are the trade-offs? What is my next action?